M&A won’t alleviate looming copper shortage, Barrick CEO warns

Barrick Gold (TSX: ABX; NYSE: GOLD) CEO Mark Bristow believes that mergers and acquisitions (M&A) will not expand the copper supply necessary for the energy transition.

While mining giant BHP (ASX: BHP) pursues a $39 billion deal for Anglo American (LON: AAL), Barrick’s CEO told the Financial Times that companies should prioritize investing in exploring and developing new copper deposits.

For Bristow, BHP’s approach to Anglo reinforces the necessity for industry investment in its future.

“You can consolidate, but it doesn’t bolster the production profile. Consolidation often leads to production reduction,” Bristow said.

Copper demand is projected to surge in the coming decades. According to BloombergNEF, the transport sector alone is expected to increase demand by 11.1 times by 2050 from 2022. Additionally, demand to expand the global electricity grid is forecasted to rise by 4.8 times by 2050 from 2022.

By 2030, the copper supply gap is forecasted to approach 10 million metric tons.

BHP has until May 22 to decide on making a formal offer for Anglo. BHP’s initial proposal would require Anglo to sell its majority stakes in its South African platinum and iron ore businesses to its shareholders for the deal to proceed.

“BHP is the ultimate 800-pound gorilla. It’s a complex transaction,” Bristow told the Financial Times.

“It’s hard to imagine how we could be competitive in that process.”

The executive also rejected any offers to take over First Quantum (TSX: FM). The Canadian miner has been entangled in a dispute with Panamanian authorities over its Cobre Panama mine. Last November, Panama’s Supreme Court declared First Quantum Minerals’ contract to operate its giant Cobre Panama copper mine, the only mining operation in the Central American country, unconstitutional.

“Until we can see some clarity, there’s no interest from us in this opportunity. In our view, it’s not an opportunity,” Bristow said.